Source · Select Committees · Public Accounts Committee
Recommendation 18
18
Accepted
HMRC’s compliance work effectively reduces the national tax gap.
Conclusion
HMRC’s compliance work helps to reduce the difference between taxes theoretically owed and those actually paid (known as the ‘tax gap’), resulting from accidental or deliberate failure of taxpayers and their representatives to pay the right amount of tax. HMRC’s Customer Compliance Group (CCG) contains the operational directorates that deal directly with non–compliance.32
Government Response Summary
The government agrees and states it has implemented the recommendation by securing record compliance yields, setting stretching targets, and committing to recruit an additional 5,500 compliance staff by March 2030 to deliver £7.5 billion of additional tax revenue annually.
Government Response
Accepted
HM Government
Accepted
3.1 The government agrees with the Committee’s recommendation. Recommendation implemented 3.2 HMRC has written to the Committee alongside this Treasury Minute response. 3.3 In 2023-24, HMRC secured record compliance yield of £41.8 billion compared to £34 billion in the previous financial year. This exceeded the annual target of £40.5 billion and was higher than pre-pandemic levels of compliance yield performance. Pre-pandemic productivity in 2019-20 was impacted by two specific very large cases, which resulted in an uplift to performance. HMRC are on track to achieve the 2024-25 end of year compliance yield target of £45.4 billion, a further improvement in performance and productivity. Final figures for 2024-25 will be released within the Annual Report and Accounts. 3.4 HMRC set stretching annual compliance yield targets in accordance with a methodology agreed by HMRC, HM Treasury and the Office for Budget Responsibility (OBR). 3.5 As announced at Autumn Budget 2024 and Spring Statement 2025, HMRC will recruit an additional 5,500 compliance staff by March 2030. This investment, alongside other measures to close the tax gap (such as investing in modernising systems, delivering policy reforms and tackling tax debt) will deliver £7.5 billion of additional tax revenue per year by 2029-30. 3.6 This commitment alongside investing in improvements in HMRC’s systems risking capabilities is expected to increase productivity over the Spending Review 2025 period. 3.7 The average rate of return of compliance activity to yield is just one factor HMRC considers when deciding how best to deploy its resources. HMRC will aim to increase productivity, while optimising deployment across compliance priorities.